The highly technical and detailed pricing models that Canada’s communications companies present to the Canadian Radio-television and Telecommunications Commission (CRTC) for regulatory approval rarely make headlines.
However, the recent intense debate around Internet pricing, and the ways Canada must deal with increasing Internet traffic and resulting congestion, have put these sometimes mundane technical efforts on the front pages.
On Monday, Bell asked the Canadian Radio-television and Telecommunications Commission (CRTC) to implement a new pricing model for wholesale Internet services called aggregated volume pricing, or AVP.
AVP enables third-party Internet service providers (ISPs) to purchase network capacity in bulk based on overall usage, rather than on a per-customer basis, giving them flexibility to offer service packages based on their own business objectives.
Third-party ISPs would pay a monthly access fee and a volume rate. Access fees would vary by speed, but the same volume rate of $200 per terabyte (about 19.5¢ per gigabyte) would apply to all service speeds. Additional charges of 29.5¢ per gigabyte would apply if overall monthly usage exceeds forecast levels.
Many third-party ISPs, including Acanac, Execulink, Primus, Yak and the Canadian Association of Internet Providers itself, have in the past advocated for AVP at the CRTC. Most would see no change in the overall cost of their existing services, only in how they are billed.
Flexible, predictable and transparent, AVP maintains the fundamental principle that those who use less network capacity do not have to subsidize those that use the most. It also enables Bell to move forward with billions of dollars in investments to increase and improve broadband capacity – investments that are needed if Canadians are going to continue to be world leaders in Internet usage.
And we are world leaders. At the risk of undermining the arguments of those for whom the grass is always greener somewhere else, here are a few facts about the state of the Internet in Canada that are worth noting.
Canadian wireline broadband prices compare favourably with those of the digital economies with which we compete. Average prices in Canadian dollars across the range of speeds and bandwidth are lower in Canada than in, for example, the United States, Japan, France and Australia. Moreover, according to the CRTC, the average price per megabyte per second has actually fallen as both consumption and speeds have increased.
According to Akamai, which uses its global server network and the billions of requests it receives daily for Web content to test actual rather than advertised download speeds, Canadian ISPs are offering speeds as fast or faster than every G8 or G20 country, with the notable exceptions of South Korea and Japan. Notable because, unlike here in Canada, the geography and population density of those two countries provide very favourable network investment conditions.
So Canadians are paying less and getting more, and getting it faster.
All this has been achieved with private capital. Canadian telecom and cable companies have invested tens of billions of dollars in the last decade in building Canada’s state-of-the-art high speed networks. Bell itself undertakes capital investments of approximately $3-billion each year, building and enhancing the digital infrastructure that supports Canada’s economy.
We’ve all heard the statistic that Canadians watch more hours of YouTube video streaming each month than anyone else in the world. Bell has seen traffic grow by more than 30% in each of the last two years, and double that in peak periods. Even with the investments Bell has made, that kind of growth in traffic inevitably leads to congestion, leading to slower speeds and dropped data.
It has taken the better part of two years’ worth of CRTC proceedings to get us to today, with more to come, during which every interested party has had and will have the chance to make its case for a new approach to wholesale Internet pricing.
Many small and independent ISPs have argued for aggregated volume pricing, and Bell now agrees with them that it’s the right approach.
Canada’s free and open society is the envy of the world. Our communications industry is a key component of that and Canadians make tremendous use of the tools it offers to create, innovate and debate. Let’s celebrate that, while recognizing the ongoing investments that will be required to continue to ensure it remains a reality.